iSelect attracts ASIC interest as profit forecast falls short
The corporate regulator will review the accounts of iSelect after questions were raised about profit forecasts given in its prospectus.
iSelect announced a $13.4 million after-tax profit on Thursday, less than the $14.5 million forecast in a table on page 5 of its prospectus.
Its shares fell 6 per cent on Thursday and more than 12 per cent on Friday, continuing the poor performance since it listed on the ASX on June 24 at $1.85.
It is believed the Australian Securities and Investments Commission is aware of the apparent discrepancy between the forecast and the actual result.
iSelect spokesman Matthew Cuming declined to say whether ASIC had been in contact over the results. "I don't go into discussions with regulators with the media," he said.
However, he defended the prospectus, saying it had been reviewed by lawyers and approved by auditors. "We complied fully with our requirements under ASIC guidelines," he said.
The difference between the forecast in the prospectus and the actual result was largely caused by the costs of iSelect's float.
Page 60 of the prospectus includes a lower profit forecast figure - including those costs - of $13.4 million.
Mr Cuming said the table on page 5 referred potential investors to the information on page 60.
"The prospectus has to be read in its entirety - you can't just refer to one page," he said.
"You cannot selectively pull out information like that."
Asked why the company did not disclose the lower profit forecast on page 5, he said: "We're not required to."
On Monday, iSelect hit back at critical media coverage and "inaccurate commentary" in a three-page announcement to the ASX.
The shares fell for the ninth day in a row on Tuesday to $1.35, down 1.8 per cent, or 2.5¢.
InvestSMART FORUM: Come and meet the team
We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.
Want access to our latest research and new buy ideas?
Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.Sign up for free